Conagra Has Approached Pinnacle Foods about a Potential Deal
Conagra Brands has approached Pinnacle Foods about a potential acquisition, sources familiar with the situation told CNBC.
Pinnacle has a market capitalization of USD7.9bn, while Conagra’s is USD15.1bn.
A pairing of Healthy Choice-owner Conagra and Bird’s Eye-owner Pinnacle would combine two companies with a large presence in frozen foods at a time when the category is seeing a resurgence. The two combined would create the second-largest U.S. frozen food company, analysts at RBC Capital Markets recently wrote. The other major players include Kraft Heinz and Nestle, the latter of which is the largest in the U.S., according to RBC.
It is at least the second time the two have had such talks in as many years. Conagra approached Pinnacle about a tie-up last year, but the two parties could not agree on a price and discussions were short-lived, sources have told CNBC.
In 2016, Conagra spun off its USD6.9bn frozen potato business, Lamb Weston Holdings. It has since been buying a number of small brands to modernize a portfolio that includes Orville Redenbacher’s popcorn and Hebrew National hot dogs. Its acquisitions include the parent of Angie’s Boomchickapop and the parent of Duke’s meat snacks.
Conagra’s CEO, Sean Connolly, recently told analysts that “M&A remains a central part of [the company’s] plan,” and that Conagra intends to pursue a range of deals including, “modernizing acquisitions, synergistic acquisitions and select divestitures.”
Connolly has a history with Pinnacle. In his former role as CEO of Hillshire Brands, he also attempted a 2014 takeover of the company, though Hillshire ultimately scrapped that deal in favor of a sale to Tyson Foods.
On the other hand, Pinnacle has acquired Boulder Brands, owner of healthy food brands like Udi’s and Glutino, for roughly USD975m in 2016.